The main learning objective for this past week was to study the process involved in planning the procurement of materials that are meant to be used for the completion of a certain project. During the study, a detailed analysis was carried out on each individual process that comprises the the procurement process of a certain project.
Before delving into discussions on what factors are considered when coming up with plan for procuring the materials required for a project, we began by understanding the meaning of a project’s procurement process. The discussion on the broad meaning of what is a project procurement process, was supposed to help us get an idea of why it was important to come up with a project’s procurement process plan.
After discussing the general meaning of a project’s procurement plan, the next step will be to embark on learning how to identify the most valuable output that should be obtained from a procurement process plan. This analysis is supposed to enable one to determine how to set the objective(s) that is to be met whenever one is coming up with a procurement process plan.
The next step after discussing how to come up with a project procurement plan,was to analyze the various types of contracts that can be made between a buyer of and a seller of the project’s materials. This discussion is meant to provide an individual with adequate knowledge that he/she can use to determine the best type of contract to enter into whenever he/she is procuring a project’s material. This discussion will also help an individual to be able to identify possible risks that may face him/her when he/she intends to enter into a procurement contract.
During this week, we also had to discuss how to identify the best source from which t purchase a project’s materials whenever we are faced with a number of choices. We were also supposed to discuss some crucial ethical concerns that should be considered whenever identifying a a potential seller from which to purchase a projects’s materials. In addition to this, we were also supposed to discuss the importance of practicing risk management when coming up with a procurement process plan. All the above subtopic to form some of the objectives that were supposed to be met when learning how to come up with a good project procurement process plan.
However, in addition to the obtaining knowledge on how to come up with a good project procurement process plan, we also discussed how to come up efficient and effective communication management plans. This discussion entailed how to come up with a communication management plan that fully addresses the expectations of the stakeholders of an organization. We were also supposed to study the various methods that can be used to measure the performance of different personell in an organization and how to reward them for their performance achievements.
Description of the procurement planning process
The procurement planning process of a project involves the determination whether it is necessary to purchase or procure the products or services required to complete a project from sources that are outside the organization. On a number of occasions, an organization may find itself in a position where it is unable to complete certain functions or projects using its current resources. When organizations face such situations, they are forced to consider the option of outsourcing the products or services that are required to complete such projects thus bringing about the need to come up with a suitable procurement process.
There are a number of decisions that have to be made when coming up with a procurement planning process. The first decision made by organization during the procurement planning process is whether there is a genuine need to for the organization to undertake the procurement of some products or services. Once an organization’s management is convinced that some products or materials need to be procured from outside sources, they are faced with a second question on how the method they shall use to procure the products or services needed for the project. Members of an organization’s management also have to decide the exact details of what they need to procure, the quantities that they shall procure and the exact time that they shall undertake the actual procurement. All the above questions provide a summary of what constitutes the actual procurement process.
There are a number of outputs that arise from a procurement process plan. For example, after a procurement process plan is complete, details such as the project’s preliminary costs, schedule of project events and quality management plans should be outlined. A procurement process plan should also outline the projection of cash flows expected from the project as well as the detailed work break down structure that will outline how the project will be carried out.
In my view, I do believe that the formulation of a good work breakdown structure is the most important output of a procurement process plan. The organization and implementation of most organizational projects are usually complex process that requires a guideline of the order of activities that will be followed when carrying out the project. Therefore, in order for a project to be carried out in an organized and efficient manner, a work break down structure needs to be formulated.
The importance of a work breakdown structure as an output of a project’s procurement process plan can be explained by a number of reasons. For example, a work breakdown structure provides a guideline of the order that will be followed when carrying out different activities of a project. A work breakdown structure is also important because it provides a guideline of the responsibilities held by different people who are responsible for the implementation of the project within the organization. It provides a guideline of the duties of each individual, as well as the deadlines they should meet, when completing the tasks allocated to them. In summary, the work breakdown structure acts as the backbone of the procurement process plan. This is because; its absence makes it very difficult to co-ordinate all the other aspects of a procurement process plan.
Different types of procurement contracts
It is important to note that different types of contracts are appropriate for different types of procurements. There are some contracts that would be suitable for different types of procurements and unsuitable for other types of procurements. It is, therefore, important for the management to consider the most appropriate type of contract to use whenever they are entering into a procurement contract.
Basically, there are three main types of procurement contracts. The three types of contracts include:
- Fixed price contracts: These types of contracts are also referred to as lump sum contracts. In this type of contract, both the buyer (company) and the seller agree on a fixed amount of money that will be paid for the procurement. The contract is usually seen as risky for both the buyer (company) and the seller of the procured products or services. This is because the seller faces the risk of procuring products or services that are of a lesser value than the price agreed for the procurement. The seller, on the other hand, faces the risks of incurring extra costs that had not been considered when entering into a fixed price contract. This type of contract is, therefore, be considered appropriate when both the buyer and the seller entering the contract, are sure of all the details that affect the contract.
- Cost-reimbursable contracts: In this type of contract, the buyer (company) is supposed to reimburse the cost of the procured products or services as well as any other costs that may have been incurred during the process of delivering the products or services to the buyer. These costs are basically dived into two i.e. direct and indirect costs. Direct costs are those costs incurred by the organization exclusively for the completion of the project. An example of direct costs is the cost incurred to pay the salaries of staff carrying out the project. Indirect costs, on the other hand, are usually calculated as a percentage of direct costs. In addition to the reimbursement of procurement costs, the buyer (company) is supposed to pay the seller of the procured materials an additional amount of profit.
- Time and material contracts: This type of contract can be simply summarized as a mix of both the cost-reimbursable and the lump sum contracts. This type of contract can be described as fixed in that both the buyer and the seller agree on the units or quantities of the products that are to be delivered. The contract is determined as a cost-reimbursable type of contract because the buyer pays the seller an amount that represents all the costs incurred plus an additional profit after the delivery of the procured goods.
Selection of the source for procured materials
When a company intends to procure materials for its project, it is usually faced with several options of sources from which it can procure the project products or services it requires. However, it is important to note that despite the fact that there may be several sources of project materials, the company’s management should pick the best source from whom they shall procure the products or services they require.
There are generally four methods that are mostly used by most organizations to select the best source from which to procure various products and services. These four methods include:
- Contract negotiation: This method entails discussions in which both the procuring company and the different prospective sellers engage in discussions negotiations on how to come up with a procurement contract that will suit both parties. The procuring company evaluates the different contracts presented to it and selects the seller who provides the best deal for the company
- Weighing System: This method involves assigning numerical weights to the different proposals provided by the prospective sellers and, thereafter rating the proposals. The rate for each proposal is then multiplied to the rate assigned to it in order to determine the project that has the highest score. The procuring company then procures the products or services it desires from the company that has the highest score.
- Screening System: A procuring company can use this method to select the source of procured materials by coming up with minimum requirements that should be met by the seller. The seller who meets most or all the minimum requirements set by the company is assigned the task of delivering the products or services that are intended to be procured.
Ethical concerns that should be considered when selecting a source
Before a procuring company identifies a source from which to procure its products and services, it needs to carry out a number of ethical practices. For example, the personnel in charge of the procurement process need to ensure that they follow the company’s policy guideline on the steps that have to be followed when procuring products and services. The company also needs to ensure that it procures products from a legally operating company. In addition, the procuring company needs to ensure that it procures legal materials and that it follows it uses a transparent procurement process.
Role of risk management in the procurement planning process
The procurement process is one that faces a number of risks that may complicate or even terminate a company’s efforts of procuring certain products or services. It is, therefore, very important to include risk management procedures when coming up with a procurement process plan.
A procurement process plan that has risk management procedures is likely to be less vulnerable to the risks that may complicate the process of procurement. The application of risk management procedures will ensure that the procuring company is able to mitigate any negative effects that may arise from the occurrence of a risk during the process of procurement.
During this past week, I learnt about the process followed when coming up with plan to be used for the procurement of materials to be used for a project. I also learnt how to come up with a good communication management plan that can be used to ensure that there is efficient communication between different classes of personnel who are responsible for the completion of a project. I also learnt how to come up with proper ways of measuring the performance of different personnel who work in company.
I can be able to apply the knowledge I have learnt this week in a number of ways at my place of work. For example, I will most likely encounter a situation in my workplace where I will be required to organize the implementation of a certain project. In order for the implementation of the project to become successful, I will need to purchase some materials that will be used to complete the project. The knowledge I have gained this week on how to come up with an efficient procurement plan will be very useful in enabling me to identify the best source from which I shall obtain my materials.
I will also use the knowledge I have obtained from my studies of the procurement process to determine all the ethical concerns that should be considered when selecting a suitable source from where to obtain the materials for the project that needs to be accomplished in the workplace. In addition, I am now able enter into suitable procurement contracts when buying materials for a project as well as successfully managing any risks that are likely to face the procurement process of a project’s materials. In addition, I am now in a better position to come up with a good communication plan that can be used at my workplace. This will be very helpful in enabling me ensure that there exists good communication channels at my workplace.
I can also be able to apply the knowledge I have gained this week in my personal life. This is because I have gained important lessons on how to be more efficient and effective whenever I am procuring materials for my own personal use. I am also in a better position to know how to communicate with different types of people at a personal level after obtaining knowledge on how to come up with a good communication management plan. I have also learnt how to evaluate how evaluate and appreciate the efforts of other people who I relate with in my daily life.
A communication management plan is a very important plan in an organization because it provides the structure or guideline on how communication processes will be carried out in an organization. A good communication plan gives a number of communication guidelines. For example, a good communication should provide a guideline on how files from an entire organization will be stored and the style of arrangement that will be followed. Another important guideline provided by a good communication plan is how different reports, files and data will be distributed or exchanged in between the different departments of an organization. A communication plan is also supposed to give a description of the different types of information that should be distributed within an organization.
Good communication plans also give production schedules that show the timelines that should be followed when producing different types of communication. In addition, good communication plans also give a guideline on the methods that should be followed when accessing information that is produced at different time schedules. The method that will be used to update and improve the communication management plan should also be outlined in a good project management plan.
In addition to the guidelines provided above, there are also additional guidelines that should be provided in a good management plan. For example, good communication plan should outline a number of alternative methods that can be used within the organization incase methods that have been given priority fail to work efficiently. A communication plan provide the chain of command within an organization i.e. the order that should be followed when passing information from the subsidiary levels of an organization to the top levels of an organization. This, therefore, means that a communication plan should outline the person or leaders of different departments within the organizations are to who all junior personnel working under them will give their reports.
A communication plan is an important document within an organization since it provides an avenue that can be used to manage the expectations the stakeholders of an organization. For example, the stakeholders of a business expect to be provided with reports that explain how the organization has performed over a certain period of time. A communication plan provides guidelines on the method and frequency that will be used by the organization to communicate with its stakeholders. Since an organization’s workers form part of its stakeholders, the presence of a communication plan provides a guideline on how they shall be able to communicate among themselves and their superiors. A communication plan also provides a guideline on how the employees can communicate their grievances or suggestions on how their welfare can be improved as they work for their organization.